The Maharashtra Appellate Authority for Advance Ruling (AAAR) has ruled that project management consulting services will fall under the head of “Other technical and scientific services nowhere else classified” and attracts 18% GST.
M/S. Worley Services India Pvt. Ltd., the Appellant is part of Worley Parsons Limited, which is a global engineering company providing project delivery and consulting services to the resources and energy sectors and other complex process industries. The Appellant is inter alia engaged in the provision of project management consultancy( ‘PMC’) services.
The applicant has sought an advance ruling on the issue of whether the services provided by the appellant are classified under SI No. 21(ia) of heading 9983 of the rate notification as “Other professional, technical, and business services relating to exploration, mining, or drilling of petroleum crude or natural gas or both” and attract 12% GST.
The Maharashtra AAR held that professional, technical, and business services supplied by the appellant to VL are covered under residual entry no. 21(ii) of the rate notification, attracting tax at the rate of 18%. It was contended that the MAAR has failed to understand the true commercial nature of services provided by the Appellant to Vedanta Limited (VL )and has merely passed the Impugned Order on frivolous grounds since it has not analyzed the nature of activities carried out by the Appellant.
The two-member bench of D.K. Srinivas and Rajiv Kumar Mittal observed that the activities, which merit classification under SAC 998621, are like physical performance or activities which are being directly used in the mining and extraction operations whereas the services provided by the Appellant are not so as the said services are like review, monitoring, management and supervision of the project works which are done towards the realization of mining activities.
The authority upheld the AAR’s ruling and observed that services provided through their professionals are like professional and technical services as the services provided require technically qualified and trained professionals and staff.
Further held that “the impugned services of project management consultancy services provided by the Appellant would merit classification under the SAC 998349 bearing description “Other technical and scientific services nowhere else classified, attracting GST at the rate of 18% (CGST).”
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